Agribusiness

Agribusiness is the industry, enterprises, and the field of study and in the bio-economy,

in which case it is also called bio-business or bio-enterprise.

The primary goal of agribusiness is to maximize profit while satisfying the needs of consumers for products related to natural resources. Agribusinesses comprise farms, food and fiber processing, forestry, fisheries, biotechnology and biofuel enterprises and their input suppliers.

Studies of business growth and performance in farming have found that successful agricultural businesses are cost-efficient internally and operate in favourable economic, political, and physical-organic environments. They are able to expand and make profits, improve the productivity of land, labor, and capital, and keep their costs down to ensure market price competitiveness.

Agribusiness is not limited to farming. It encompasses a broader spectrum through the agribusiness system which includes input supplies, value-addition, marketing, entrepreneurship, microfinancing, and agricultural extension.

In some countries like the Philippines, creation and management of agribusiness enterprises require consultation with registered agriculturists above a certain level of operations, capitalization, land area, or number of animals in the farm.

Evolution of the agribusiness concept

The word "agribusiness" is a portmanteau of the words agriculture and business. The earliest known use of the word was in the Volume 155 of the Canadian Almanac & Directory published in 1847. Although most practitioners recognize that it was coined in 1957 by two Harvard Business School professors, John Davis and Ray Goldberg after they published the book "A Concept of Agribusiness."

Their book argued against the New Deal programs of then U.S. President Franklin Roosevelt as it led to the increase in agricultural prices. Davis and Goldberg favored corporate-driven agriculture or large-scale farming to revolutionize the agriculture sector, lessening the dependency on state power and politics. They explained in the book that vertically integrated firms within the agricultural value chains have the ability to control prices and where they are distributed. The program was initially a joint undertaking with the UP College of Business Administration in Diliman, Quezon City until 1975. In 1973, Drilon and Goldberg further expanded the concept of agribusiness to include support organizations such as governments, research institutions, schools, financial institutions, and cooperatives within the integrated Agribusiness System.

Mark R. Edwards and Clifford J. Shultz II (2005) of Loyola University Chicago reframed the definition of agribusiness to emphasize its lack of focus on farm production but towards market centricity and innovative approach to serve consumers worldwide.

In 2012, Thomas L. Sporleder and Michael A. Boland defined the unique economic characteristics of agribusiness supply chains from industrial manufacturing and service supply chains. They have identified seven main characteristics:

Risks emanating from the biological nature of agrifood supply chains
The role of buffer stocks within the supply chain
The scientific foundation of innovation in production agriculture having shifted from chemistry to biology
Cyberspace and information technology influences on agrifood supply chains
The prevalent market structure at the farm gate remains oligopsony
Relative market power shifts in agrifood supply chains away from food manufacturers downstream to food retailers
Globalization of agriculture and agrifood supply chains

In 2017, noting the rise of genetic engineering and biotechnology in agriculture, Goldberg further expanded the definition of agribusiness which covers all the interdependent aspects of the food system including medicine, nutrition, and health. He also emphasized the responsibility of agribusiness to be environmentally and socially conscious towards sustainability.

Some agribusinesses have adopted the triple bottom line framework such as aligning for fair trade, organic, good agricultural practices, and B-corporation certifications towards the concept of social entrepreneurship.

Agribusiness system

Inputs sector

Agricultural supplies (1)

An agricultural supply store or agrocenter is an agriculturally-oriented shop where one sells agricultural supplies — inputs required for agricultural production such as pesticides, feed and fertilizers . Sometimes these stores are organized as cooperatives, where store customers aggregate their resources to purchase agricultural inputs. Agricultural supply and the stores that provide it are part of the larger Agribusiness industry.

Agricultural labor (2)

Irrigation (3)

Seeds (4)

Fertilizers (5)

Production sector

Farming

Farm mechanization

Processing sector

Primary processing

Secondary processing

Marketing sector

Farmers' market

Support sector

Education

Cooperatives

Governments

Professionals

Studies and reports

Studies of agribusiness often come from the academic fields of agricultural economics and management studies, sometimes called agribusiness management.

In their book A Concept of Agribusiness,

As concern over global warming intensifies, biofuels derived from crops are gaining increased public and scientific attention. This is driven by factors such as oil price spikes, the need for increased energy security, concern over greenhouse gas emissions from fossil fuels, and support from government subsidies. In Europe and in the US, increased research and production of biofuels have been mandated by law.